Judge: H. Jay Ford, III, Case: 24SMCV04955, Date: 2025-05-13 Tentative Ruling

Case Number: 24SMCV04955    Hearing Date: May 13, 2025    Dept: O

  Case Name:  Scheer Construction, Inc., v. Renvy Pittman

SUBJECT:                 MOTION TO COMPEL ARBITRATION

MOVING PARTY:   Defendant/Cross-Complainant Renvy Pittman

RESP. PARTY:         Plaintiff/Cross-Defendant Scheer Construction, Inc.

TENTATIVE RULING

            Defendant/Cross-Complainant Renvy Pittman Motion to Compel Arbitration is GRANTED. Defendant/Cross-Complainant Renvy Pittman (“Pittman”) proved the existence of a valid and agreed upon arbitration agreement between the parties. Plaintiff/Cross-Defendant Scheer Construction, Inc. (“SCI”) did not meet their burden to prove a defense to enforcement.

The Court orders all claims within SCI’s Complaint against Pittman and Pitman’s Cross-Complaint against Cross-Defendants SCI, Dennis Scheer, and the Ohio Casualty Insurance Company to be resolved in binding arbitration pursuant to the contractual agreements between the parties. The action is stayed pending resolution of arbitration pursuant to CCP §1281.4.

Defendant/Cross-Complainant Renvy Pittman Request for Judicial Notice is GRANTED as to the existence of articles, court documents, and the administrative ruling documents, but not to the “truth of the hearsay statements in the documents.” (In re Vicks (2013) 56 Cal.4th 274, 314.)

REASONING

            Under both the Title 9 section 2 of the United States Code (known as the Federal Arbitration Act, hereinafter “FAA”) and the Title 9 of Part III of the California Code of Civil Procedure commencing at section 1281 (known as the California Arbitration Act, hereinafter “CAA”), arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract.  (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) 

            “The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination.” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.)   “The party opposing arbitration has the burden of demonstrating that an arbitration clause cannot be interpreted to require arbitration of the dispute.” (Rice v. Downs (2016) 247 Cal.App.4th 1213, 1223, citing Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686-87.)   “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner…”  (Code Civ. Proc., § 1281.2.)

            “A party opposing the petition bears the burden of proving by a preponderance of evidence any fact necessary to its defense.” (Olvera v. El Pollo Loco, Inc. (2009) 173 Cal.App.4th 447, 453.) CCP §1281.2 only allows the Court to deny enforcement of an applicable arbitration agreement where the party resisting arbitration demonstrates (1) waiver; (2) grounds for rescission of the agreement; or (3) subsection (c) grounds involving third parties to the arbitration agreement and potential for inconsistent rulings of fact or law. (See Code Civ. Proc., § 1281.2.)

I.                Petitioner Meets Burden to Prove Existence of Valid Arbitration Agreement

Defendant/Cross-Complainant Renvy Pittman (“Pittman”) moves to compel arbitration based on three separate, but identical, Arbitration Agreements within the 9-8-22, 11-30-22, and 2-9-23 written agreements (the “Agreements”) entered into between Pittman and Plaintiff/Cross-Defendant/Cross-Complainant Scheer Construction, Inc. (“SCI”), whereby SCI would perform “gutter work,” “deck/loggia improvement,” and “below grade waterproofing at the subject Property in connection with the subject Project.” (Mackay Decl., ¶¶ 3–8; Ex. 1–3.)  The relevant portions of the Arbitration Agreements state as follows:

17. ARBITRATION: Any controversy arising out of the construction of the project referred to in this contract or regarding the interpretation of this contract or any sub-contract are bound, each to the other, by this arbitration clause, provided such party has signed this contract or has signed another contract which incorporates this contract by reference, or signs any other agreement to be bound by this arbitration clause. Arbitration shall be heard in the City of Los Angeles in accordance with the applicable rules of the American Arbitration Association which are in effect at the time demand for arbitration is filed . . . .

(Ibid., at Ex. 1–3, ¶ 17 of each individual contract.)

             On 10-10-24 Plaintiff/Cross-Defendant/Cross-Complainant Scheer Construction, Inc. (“SCI”) filed a complaint against Defendant/Cross-Complainant Renvy Pittman (“Pittman”) alleging causes of action for (1) breach of contract, (2) account stated, (3) common counts, and (4) foreclosure of mechanic’s lien (“Complaint”) in relation to the Agreements. (Mackay Decl., ¶ 10; RJN, ¶ 1, Ex. A.).

On 12-23-24 Pittman filed an Answer asserting the matter was subject to arbitration, and a Cross-Complaint against SCI for (1) declaration that the home improvement contract is void; (2) breach of contract; (3) Slander of Title, Disgorgement; (4)Negligence; (5)Fraud; and (6) Claim on License Bond. (Outwater Decl., ¶¶ 7–8; Exh. B, C.)

On 2-6-25 SCI filed a Cross-Complaint for multiple causes of action against eleven (11) Subcontractor Cross-Defendants (“Subcontractor Cross-Defendants”) associated with the Subject Project sounding in indemnity, but not against Pittman. (Outwater Decl., ¶ 9, Exh. D.)

            Pittman has proven the existence of a valid arbitration agreement requiring SCI to arbitrate the breach of contract and related causes of action associated with the Agreements. (See generally Compl.) Furthermore, SCI does not dispute the existence or validity of the arbitration agreement. Thus, Pittman meets their burden to prove the existence of a valid arbitration agreement, and now the burden moves to SCI to prove a defense to arbitration. 

II.             SCI’s Burden to Prove a Defense to Arbitration

SCI initially argues that the motion to compel arbitration should be denied because the third-party litigation exception under CCP § 1281.2(c) applies.

            “Section 1281.2(c) grants a trial court discretion to refuse to enforce written arbitration agreements when (1) a party to the agreement also is a party to pending litigation with a third party who did not agree to arbitration; (2) the pending third-party litigation arises out of the same transaction or series of related transactions as the claims subject to arbitration; and (3) the possibility of conflicting rulings on common factual or legal issues exists.” (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 964.) “A trial court has no discretion to deny arbitration under section 1281.2(c) unless all three of these conditions are satisfied.” (Ibid.)

            The “strong public policy favoring contractual arbitration . . . . does not extend to those who are not parties to an arbitration agreement, and a party cannot be compelled to arbitrate a dispute that he has not agreed to resolve by arbitration.” (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 704.) Thus, “contractual arbitration may have to yield if there is an issue of law or fact common to the arbitration and a pending action or proceeding with a third party and there is a possibility of conflicting rulings thereon,” however application of this section is “discretionary with the trial court.”
(Id., 704–705.)

            Code of Civil Procedure section 1281.2 provides that “the court shall order” parties to an arbitration agreement to arbitrate the controversy if it determines an agreement to arbitrate exists, unless it also determines: a party to the arbitration agreement is (1) also a party to a pending court action with a third party, (2) arising out of the same transaction or series of related transactions, and (3) there is a possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc, § 1281.2, subd. (c).) Section 1281.2 continues, “For purposes of this section, a pending court action … includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition.” (Ibid.)

            SCI filed the Cross-Complaint against the Subcontractor Cross-Defendants on 2-6-25, after Pittman filed the motion to compel arbitration and prior to the hearing on the motion to compel arbitration so SCI meets the criteria for “pending court action” pursuant to CCP § 1281.2(c). (Code Civ. Proc, § 1281.2, subd. (c).)

            SCI argues that since the cross-complaint is filed against Subcontractor Cross-Defendants who are not subject to the Arbitration Agreements, the Cross-Defendants are not bound by the arbitration agreements, and thus the cross-complaint must be litigated in Court. SCI further argues that Pittman’s claims must be litigated in court since they arise from the same operative facts, requiring the same determination of common issues—controversies arising from the Agreements between Pittman and SCI for the Subject Property—and thereby the third-party exception under CCP § 1281.2(c) applies.

SCI cites to Birl v. Heritage Care LLC to support their argument that the possibility of conflicting rulings “is too great to allow the arbitration of the Claims without the cross-defendants in the same forum.” (Oppo., p. 8:1–18; see Birl v. Heritage Care LLC 172 Cal. App. 4th 1313, 1321 [“Different triers of fact in different proceedings could come to different and conflicting conclusions as to which party or parties were liable, and also could arrive at different conclusions in apportioning the amount of damages”].) However, Birl involves an action brought by the family of a deceased patient against a hospital, the physicians and the nursing facilities for multiple causes of action including elder abuse, negligence, breach of contract, etc… where the court found that certain “codefendants in the action (the hospital and doctors) are third parties unaffected by [the] arbitration agreement, and []the plaintiffs alleged several causes of action in their individual capacity as third parties not bound by the arbitration agreement,” thus the third party exception applied for trial court to deny the motion to compel arbitration. (Birl, supra, 172 Cal.App.4th at p. 1315.) Birl does not involve a separate claim against completely separate parties for causes of action sounding in indemnity and breach of contract between SCI and the Subcontractor Cross-Defendants as the case here. Thus, Birl is distinguishable and not persuasive.

SCI provides only hypothetical and uncertain issues that may arise between the rulings and no persuasive on point authority to show that filing a cross-complaint after the filing of a motion to compel arbitration including only subcontractors in privity with SCI, and no allegations against Pittman, will place this situation squarely under the purview of CCP § 1281.2(c). Thus, the Court cannot find that the third-party exception is an issue in this case. SCI’s Cross-Complaint against eleven separate Subcontractors only alleges facts regarding issues that arise if in fact SCI is found liable, and the effects of different level of liability that might be found in relation to SCI’s subcontractors. (See SCI Cross-Compl., ¶¶ 11, 15–18, 38, 40.) The third-party exception does apply in this case, as there is no risk of inconsistent rulings.

Additionally, SCI does not show that the subcontractors can evade the broad language of the arbitration agreements. The Agreements state, “Any controversy arising out of the construction of the project referred to in this contract or regarding the interpretation of this contract or any sub-contract are bound, each to the other, by this arbitration clause, provided such party has signed this contract or has signed another contract which incorporates this contract by reference, or signs any other agreement to be bound by this arbitration clause.”  (Mackay Decl., ¶¶ 3–8; Ex. 1–3.) SCI provides no evidence that the subcontractors did not sign a contract with SCI which incorporated the arbitration agreement, only conclusory arguments within the opposition that the subcontractors are not bound by the arbitration agreement. The Arbitration Agreement language is broad and inclusive and the Court cannot find that it does not incorporate the subcontractors without evidence showing as such.

Additionally, SCI argues that the negligence cause of action within the Pittman’s cross-complaint “potentially falls outside the arbitration agreement” since Pittman as the “owner of the building in this action” as the right to “pursue a superior court action based in tort.” (Oppo., p. 9.) SCI provides no authority for this argument. If Pittman wanted to pursue litigation in this matter, Pittman would not have filed the motion to compel arbitration. Thus, this argument not persuasive and the cross-complaint’s negligence cause of action does not fall outside the broad scope of the Arbitration Agreements’ language commanding the arbitration of “any controversy arising out of the construction of the project referred to in this contract.” SCI provides no authority that the term “any controversy” does not include a negligence cause of action, and thus, additionally SCI’s argument is without merit.

            Finally, SCI argues that piecemeal stays of portions of the litigation would be prejudicial and would waste judicial resources, but SCI again provides no authority or evidence to support the argument. The Court is “not required to examine undeveloped claims” or make arguments on the party’s behalf. (Hester v. Public Storage (2020) 49 Cal.App.5th 668, 681.)  

Thus, SCI fails to satisfy its burden to show a defense to arbitration. Pittman’s Motion to Compel Arbitration is GRANTED.

III.           Stay pending resolution of arbitration pursuant to CCP §1281.4 

            “If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.)

The action is stayed pending resolution of arbitration pursuant to CCP §1281.4.